Inheritance Tax Planning Inheritance Tax planning is vital to ensure that the maximum amount of wht you have worked for during your lifetime is passed to whoever or whatever you prefer to receive the benefits of your Life's achievements. The default position is that everthing in excess of £285,000 (2006/7 tax year) will be subject to 40% tax! Inheritance Tax Planning is the effort to mitigate as much of your potential tax bill as possible. When Does Inheritance Tax (IHT) apply? IHT is payable after death on assets of value in excess of £285,000. However, no IHT applies on transfers between Husband and Wife, however, both husband and wife do both separately have an £285,000 allowance that can be disposed of, free of tax, at the time of their demise. Reservation of Benefit Test? Whenever you are considering making a gift of cash or asetts to a person other than to a spouse the potential for IHT planning exists. However, if you retain access or use to any part it can negate the whole gift as far as IHT planning is concerned. Advice must be sought to avoid breaching these rules. How can IHT be mitigated? IHT can be planned for and mitigated by use of several products. Prmarily the tools we use are Trusts and Insurance. The use of Trusts allow for most planning to provide a means of transferring an asett but also exercising some control, either directly retaining involvement as a trustee or also by whom you choose to appoint as a Trustee. Trusts combined with tax efficient savings such as off shore bonds for example, based in Isle of Man give efficient investment plans combined with the Trusts, but importantly adding security from the laws of the Offshore Tax Shelters. Insurances can be used to provide a lump sum sufficient to pay the tax that will be due in order that the asett itself must not necessarily be sold to pay the tax due. If a gift is made, potentially the tax may become due if the person making the gift dies within 7 years. The tax that is charged is currently 40% of the value of the gifted asett. 100% of the amount of the value of the gift is made if death occurs during the first three years, reducing to 80% during the 4th year, 60% 5th Year, 40% 6th year and finally 20% during the 7th year. Insurance can be provided to cover the reducing tax liability. This is called Inter Vivos Insurance. Alternatively potential beneficiaries of an estate may calculate the value of the estate and take life insurance out on the life of the person that will make the gift, so that when death occurrs the life insurance will pay out the sum insured to the potential beneficiaries in order that they can pay the IHT liabiliy and receive the benefits without those asetts being eroded by taxation. It is vitally important that any such policy be payable by Trust or other means to the beneficiaries and not the person being insured otherwise the proceeds will simply increase the burden of taxation and reduce the benefit of the policy by the current rate of taxation at the time of death, which is at present taxed at 40% The moral of the story is to always take proper advice - it is very easy to come unstuck!

The Two Certainties at Birth When you come into this world there are just 2 certainties. First Certainty: You will Die Second Certainty: You will be taxed until you reach the first certainty ... and beyond! We see it as our aim in life to get the Tax payable down as low as legally possible!